What are the tax benefits of using a Donor Advised Fund?

Donor Advised Funds are a tax-effective way to manage your giving. They allow you to give more and give better to the causes you are passionate about.

Give more with gift aid

If you are giving through a donor advised fund vehicle like the CAF Charitable Trust and pay UK tax, then Gift Aid is available to you. Gift Aid donations are regarded as having basic rate tax deducted by the donor. Charities take a donation, which is money the donor has already paid tax on and reclaim the basic rate tax from HMRC on it’s ‘gross’ equivalent; the amount before basic rate tax was deducted.

Basic rate tax is at 20%, so this means that if a donor gives £10 claiming Gift Aid, it is worth £12.50 to the charity (80% of £12.50 = £10). If the donor is a higher or additional rate tax payer, they can make a claim for the higher or additional amount of tax they pay, via their Self Assessment tax return.

Giving shares

Giving HMRC-qualifying shares to your Donor Advised Fund means you could get Income Tax relief on the value of the shares, as well as exemption from Capital Gains Tax.